As Congress debates America's energy future, vehicle-dependent businesses such as Birmingham's Alacare Home Health & Hospice struggle to cope with high gasoline prices.

With about 600 nurses, physical therapists, social workers and chaplains traveling across Alabama to work with patients, Alacare has had to get creative to control the fuel expense.

When gas prices first climbed into the $3-a-gallon range last year, the company bought a fleet of 27 PT Cruisers - chosen for their gas mileage - and gave staff members who drive them a company gas credit card to use when filling up, said Richard Nieves, communication director.

Gasoline prices have dropped a little since peaking in May, but the Energy Information Administration predicts retail gasoline prices will average $3.05 per gallon this summer, 21 cents higher than last summer. The Birmingham area set a record May 23 with $3.07 a gallon, but has held at about $2.90 lately, according to the AAA Fuel Gauge report.

Alacare last year increased its gas allowance for those who choose to drive their own vehicle to 39 cents a gallon and encourages staff to schedule visits with patients who live close together on the same days to limit trips, Nieves said.

This year, while the company isn't planning to increase the allowance again, they are buying 181 more cars, Nieves said.

"Gas and the cars are one of our most major expenses," Nieves said.

Other businesses tell similar stories. Fuel costs have increased 35 percent over the past two years at Tacoma, Wash.-based Chuckals Office Products. That's significant because fuel costs are the third largest expense for the independent office products dealer, after cost of goods and employee wages.

Chuckals has "put any plans for expansion on hold until prices come back down," said Vice President Al Lynden.

Turning to more fuel-efficient vehicles isn't an option - there aren't any that fit their delivery needs, according to the company.

"It's crazy you all don't have a better alternative," said Sen. John Kerry, D-Mass., chairman of the Senate Small Business and Entrepreneurship Committee.

Fuel economy mandates debated

Businesses would have a better alternative if Congress forces automobile manufacturers to make more fuel-efficient vehicles, Kerry said. That's a key part of energy legislation pending in Congress.

Higher fuel economy standards present auto makers "with the greatest technological challenge this industry has ever faced," said Dave McCurdy, president and CEO of the Alliance of Automobile Manufacturers.

Kerry, however, thinks "American ingenuity" can rise to the challenge.

"I'm absolutely convinced it would prove so much easier than people think," he said.

Memphis-based FedEx Corp., which operates 77,000 vehicles and spends $3 billion a year on fuel, has 93 hybrid-electric vehicles in its fleet and is supporting efforts to refine the technology. The hybrids, however, cost $35,000 more than a conventional delivery vehicle, said FedEx Chairman and CEO Frederick W. Smith. Widespread deployment is "impossible" with that kind of cost disparity, he said.

Businesses will need incentives to adopt alternative-fuel vehicles, he said.

Karen Kerrigan, president and CEO of the Small Business & Entrepreneurship Council, thinks higher fuel economy standards would hurt small businesses, "who often need larger and more powerful vehicles." Higher standards "would mean fewer choices, higher costs and reduced safety," Kerrigan wrote in a letter to senators.

Smith, who co-chairs the Energy Security Leadership Council, supports higher fuel economy standards, as long as they're tailored to specific types of vehicles.

"I rarely come to Washington to argue for government regulation," Smith told Kerry's committee. But the free market "has not - and will not - adequately motivate the investments necessary to protect the nation in the event of an oil crisis," he said. "As such, mandating improvements in the fuel economy of our cars and trucks is one critical and unavoidable step that Americans must take."

'Years' of costly energy ahead

Higher fuel economy standards and alternative energy incentives may help small businesses cope with their transportation needs in the long run, but there's no short-term solution in sight.

U.S. businesses face "years of relatively more expensive energy," said William Dunkelberg, chief economist for the National Federation of Independent Business.

At current prices, however, fuel costs are "probably not that big of an issue" for small businesses that don't operate a fleet of vehicles, he said.

Republicans, meanwhile, contend the Senate missed a chance to reduce gasoline prices by rejecting an amendment that would have streamlined permitting for oil refineries.

No new refinery has been built in the United States since the 1970s, although oil companies have expanded existing ones.

Cindy F. Crawford is managing editor of the Birmingham Business Journal and can be reached at (205) 443-5631 or ccrawford@bizjournals.com. Kent Hoover is Washington bureau chief for American City Business Journals and can be reached at khoover@bizjournals.com.